What is the intended purpose behind a Workers’ Compensation Medicare Set-Aside (WCMSA)? The WCMSA Reference Guide, Section 3.0 states: “A WCMSA allocates a portion of the WC settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare (“Medicare covered”) (emphasis added).

Accordingly, Medicare through its issued guidance has provided that medical expenses should not be included in a WCMSA if the expense would not otherwise be covered by Medicare. In summary, the purpose of a WCMSA is for the parties to set aside funds so that Medicare does not make payment that is injury-related.

Medicare, Medicare Advantage, and Medicare Part D prescription drug plans all receive guidance from the Centers for Medicare & Medicaid Services (CMS) as to what may be covered by Medicare. For example, Medicare does not generally pay for hearing aids, dental care, and Part D plans do not pay for prescription drugs which are not being utilized for FDA approved purposes and/or supported by medical compendia. As such, if the workers’ compensation carrier/employer desires to provide funding to the injured worker for these non-Medicare covered expenses as part of the settlement, it typically does so outside of the WCMSA.

Further, a covered Part D drug as defined in 42 CFR 423.100 is a drug included in the Part D’s formulary or as a result of a coverage determination. Pursuant to 42 CFR 423.566, Part D drugs can be denied coverage based on non-medically accepted indication. 42 USC 1395x(t)(2)(B) defines medically accepted indication as an FDA approved indication, approved in compendia, or approved pursuant to a peer review medical literature. 42 USC 1396r-8(g)(i) further indicates that a State shall create a program to address covered out-patient drugs using predetermined standards consistent with Compendia and peer reviewed medical literature. Moreover, the May 14, 2010 CMS Memorandum indicates that a non-covered part D drug should not be paid out of a Medicare Set-Aside.

A “covered Part D drug” is “a drug that may be dispensed only upon a prescription and that is described in subparagraph (A)(i), (A)(ii), or (A)(iii) . . .” of 42 U.S.C. section 1396r-8(k)(2). 42 U.S.C. Section 1395w-102(e)(1)(A). For a Part D drug to be covered by Medicare, and thus included properly in a WCMSA, the drug should be prescribed for an outpatient use that is approved under the Federal Food, Drug, and Cosmetic Act [21 U.S.C.A. § 301 et seq.], or supported by one or more citations included or approved for inclusion in any of the compendia described in subsection (g)(1)(B)(I) of 42 U.S.C. Section 1396r-8”.

Within the last few months, the industry has observed an alarming trend in which the new Workers’ Compensation Review Contractor (WCRC) has been allocating for prescription drugs even where the prescription is being prescribed for off-label usage and not supported by recognized compendia- in other words, if the claimant were to bill the Part D plan for the prescription drug, it would not be a Medicare covered expense.

The industry first observed this recent trend with respect to Lyrica, which it traditionally is only considered a Medicare covered item in cases where it was prescribed to treat certain types of neuropathy and spinal cord injuries. However, this issue has now expanded beyond Lyrica to other prescription drugs such as Modafinil and Duexis where these drugs are also being utilized for non-Medicare covered purposes.

What seems to be occurring is that the WCRC is allocating for these off-label drugs in claims where the payment history demonstrates that the workers’ compensation carrier/employer has paid for the medication, even though the drug is being utilized off-label to treat conditions that are not otherwise Medicare covered.

Below is an example of an explanation that the WCRC has provided on one of our submissions involving off-label usage of Lyrica wherein the WCRC inappropriately allocated for the drug within the WCMSA:

“LYRICA ADDED TO THE WCMSA, AS IT IS BEING PRESCRIBED FOR THE WORKER’S COMPENSATION INJURY AND THE WCMSA REFERENCE GUIDE 9.4.6.2 STATES: FDA APPROVED DRUGS USED FOR INDICATIONS OTHER THAN WHAT IS INDICATED ON THE OFFICIAL LABEL MAY BE COVERED UNDER MEDICARE IF THE CARRIER DETERMINES THE USE TO BE MEDICALLY ACCEPTED, TAKING INTO CONSIDERATION THE MAJOR DRUG COMPENDIA, AUTHORITATIVE MEDICAL LITERATURE AND/OR ACCEPTED STANDARDS OF MEDICAL PRACTICE. THERE ARE MANY OFF-LABEL INDICATIONS THAT ARE LISTED IN RECOGNIZED COMPENDIA AND PEER-REVIEWED SOURCES; THUS, THEY WOULD BE COVERED UNDER THE PART D BENEFIT, AND SHOULD ALSO BE INCLUDED IN A WCMSA.”

Given this policy change in which the WCRC is including drugs inappropriately in WCMSAs, workers’ compensation carriers/employers have the following options in which an injured worker has been utilizing a prescription drug which is not supported by the FDA for its usage:

1)  Utilize and incorporate a non-submitted Evidence-Based Medicare Set-Allocation (EBMSA) into the settlement. Submission of a WCMSA to CMS is voluntary. Additionally, by not submitting an MSA to CMS, primary plans preserve their appeal rights afforded under the SMART Act.

2) If the parties desire CMS’ approval on the WCMSA, the workers’ compensation carrier/employer should work with the treating physician to discontinue usage or substitution for the particular drug. CMS would require at least six (6) months of medical records which demonstrate that the claimant is no longer taking the drug or has successfully switched over to a substitute medication.

3) If the parties desire CMS’ approval on the WCMSA and time is of the essence, parties can submit the WCMSA to CMS but understand that a counter-higher is likely and a reconsideration is not likely to be accepted due to the WCRC’s current position that their allocation methodologies are supported. Employ the right professionals to ensure your submitted WCMSA is properly worded regarding these off-label drugs to preserve your limited re-review/reconsideration rights.

We welcome discussion and insight from our clients on this topic.  We have clients that are considering litigation due to the WCRC’s current allocation methodologies that are causing financial harm and are inconsistent with CMS’ published policies. We will keep our subscribers updated.

 


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